FTC Tells Amateur Bloggers to Disclose Freebies or Be Fined

Gadget bloggers and Amazon.com reviewers now must disclose freebies and financial interests or face fines up to $11,000, according to rules announced by federal regulators Monday in an attempt to make word-of-mouth endorsements on the net easier to believe.

The Federal Trade Commission introduced the rules to prevent the net from being flooded with paid-for reviews which appear to be the work of everyday netizens, but are actually paid for with free products. But the new rules (.pdf) are confusing, ambiguous and likely unenforceable in the real world, given the size of the net, the sheer number of blogs and reviewers, and the difficulty of making distinctions between media professionals and amateurs — and between sponsored posts and pure reviews.

Under the new rules, a hiking enthusiast with a personal blog who got a free backpack would have to tell her readers about the gift and also disclose it in any online review. By contrast, established review sites such as Consumer Reports or Wired.com’s Gadget Lab do not need to disclose whether they get freebies or what they do with them. (For the record Wired.com returns most anything of value that can be returned.)

The FTC’s logic is that people trust established sites. They can’t do the same for a blog or reviewer, so disclosures are a must.

The Commission acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media to be sponsored advertising messages. [K]nowing whether the media entity that published the review paid for the item in question would not affect the weight consumers give to the reviewer’s statements….

In contrast, if a blogger’s statement on his personal blog or elsewhere (e.g., the site of an online retailer of electronic products) qualifies as an “endorsement” – i.e., as a sponsored message – due to the blogger’s relationship with the advertiser or the value of the merchandise he has received and has been asked to review by that advertiser, knowing these facts might affect the weight consumers give to his review.

The rules break down roughly like this:

If a well-known dog blogger reviews dog food they bought, no disclosure is necessary. If they review free dog food acquired through a coupon spit out by the supermarket’s computer, no disclosure is necessary. But if the dog food company sends the blogger a free sample based on their review, both the company and the blogger are on the hook if any subsequent review doesn’t include that info.

That rule will strike the wine-blogging community hard, according to Joel Vincent, a tech consultant who runs OpenWineConsortium, a social networking site for the wine community.

One of the perennial, hot topics among wine bloggers is the ethics of accepting and disclosing samples, which are given out widely by the nation’s wine industry — composed of 6,000 mostly family-owned operations that are looking for cheap ways to market their product.

That debate just got a lot simpler — disclosure is now required by the FTC rules — at least if you are not a “professional.”

“The vast majority of wine bloggers are citizen bloggers,” Vincent said. “You are going to want to disclose just to make sure you never get called on by the FTC.”

But the rules leave much to interpretation.

For instance, is it enough to disclose on an “About Me” page that one accepts samples or does each review need to have that disclosure?

What’s the short code for disclosing that information in 140-character tweet?

What responsibility do review aggregation sites, such as those run by Google or Microsoft, have if they display posts that are ‘sponsored’?

The FTC also failed to clarify much about the grey area surrounding affiliate links — links to purchase sites that have special codes to reward the site that drove the traffic to Amazon, or Wine.com or website-hosting provider.

Do sites need to disclose that their links to a product within a review will profit the site owner, even if the product was something the person bought or paid for?

Are the rules different for an establishment site different from those for a site run by a wine connoisseur with a writing habit?

And perhaps, the hardest question of all in an age where everyone has access to an online printing press, how can you distinguish a professional site from an amateur one?

For a concrete example, take BoingBoing.net, one of the net’s top blogs that is published inside the United States. Cory Doctorow, one of the site’s principal writers, occasionally reviews books there, but he’s not a professional book reviewer.

Still, readers of his reviews bought 25,000 books through Amazon.com last year, and his affiliate links to those books earned him a commission — which, assuming a $10 average price likely netted Doctorow about $20,000 a year.

But, he’s a professional writer, among other things, and Boing Boing as a blog has a larger readership than many mainstream publications who escape the FCC’s rules. Doctorow also seems to reside mostly in the U.K., complicating jurisdiction. And no one seems to have accused Doctorow of being on the take.

But do the rules apply to him? It’s very unclear.

UPDATE: Doctorow responds in the comments that he always discloses and disposes.

“For the record, I always disclose when a book review was generated from a free galley, ARC or finished book (if the book is a printed manuscript or an ebook, I sometimes skip it, since I tear off and discard sheets from the former and generally delete the latter once I’m through with it),” Doctorow wrote. “Though, to be honest, “free” books are a substantial liability, since I get sent about 20 dumb, off-topic or not-quite-right books for every one I review, and I have to pay for a PO Box and a monthly taxi to get them all to the local charity shop.”

That’s far more stringent than any policy I’ve ever heard of from a mainstream publication, including Wired.com.

It’s also unclear just how enforcement will actually work, given the FTC doesn’t have the manpower to go after many offenders, since it’s also in charge of policing spamming, telemarketers, infomercials and business fraud of all kinds, electronic and real-world.

And by the way, this post was brought to you by Twinings English Breakfast tea, but I think Wired.com is established enough that I don’t have to tell you if we paid for it or not. Though then again, we are using WordPress to publish this blog.